Meituan Dache has cooperated with other local ride-hailing companies, a strategy used before by Didi when it partnered with Lyft, Ola and Grab.
Ride-hailing, an ever-booming trend. Photo by Humphrey Muleba on Unsplash
The ride hailing arm of Meituan Dianping (美团点评) ,Chinese platform providing retail and online group buying services, Meituan Dache expanded its services in Nanjing and Shanghai by partnering with a number of other ride hailing companies such as Shouqi Limousine & Chauffeur (首汽约车), CAR Inc. (神州租车) and Caocao Chuxing (曹操专车). Meituan Dache users in these two cities are offered an extended range of ride services to choose from, either from Meituan Dache’s own fleet of drivers or those of its partners. The current (technonde link) partnership focuses on improving user experience and won’t involve any subsidy campaigns, according to Chinese media.
“We made this decision based on the assessment and research on the current market changes,” said the head of the Meituan Dache.
This new partnership aims to improve the user experience through technology, without any huge subsidies. The move will also reduce operating costs and enable it to start promoting car-hailing services in more cities again.
Following a 57% jump in operating losses in the fourth quarter of 2018, the Chinese food delivery giant is exercising more prudence for business areas beyond its core food delivery service this year, according to Technode. The focus towrds transportation, where Meituan tried to take over the bike-sharing market after acquiring Mobike has not showed mucg progress, forcing Mobike shut down some of its Asian businesses in March.
Meituan Dianping did not planned to expand its ride hailing firm according to the company’s prospectus that it filed last year in Hong Kong. This partnership with other ride-hailing companies shows a change in its strategies from directly operating a ride-hailing platform to internet traffic business.
This kind of partnership strategy was used before by Didi, when it allied with Singapore’s Grab, Lyft and India’s Ola to compete Uber in the ride-sharing market. Though Dianping Dache isn’t competing with Uber, but it might just want to round up against Didi in the local market.
Meituan Dianping officially started its car-hailing service Meituan Dache in Shanghai last year in March. Later, the firm named the cities it planned to expand into, including Beijing, Hangzhou, Xiamen, Chengdu, Fuzhou and Wenzhou, and started recruiting drivers. But the plan never took off. Meituan Dache still just covers Nanjing and Shanghai.
There are low gross profits for Meituan’s existing takeout services and little possibility of growth. The subsidy war against Ali in the movie sector has become a stalemate and Meituan has not gained much market share in the travel sectors with Ctrip being dominant players. Meituan has to look for a new way to gain profit.
Nationwide, Didi enjoys a commanding market share of about 90%, according to data service company Jiguang.
The survey by Nikkei Asian Review of 1,000 urban consumers also shows Didi's many competitors lag far behind in the popularity stakes. However, a city-by-city analysis presents a much clear picture.
Last year China-based EV startup WM Motor forged a strategic partnership with Meituan Dache. The cooperation was meant to allow Meituan Dache to use WM Motor's EV, EX5, for its ride-hailing service, intending to introduce the new retail mode to the car-hailing scenarios and offer better mobility services to users.
On January 09, 2019, Meituan entered into strategic cooperation with France-based automotive supplier Valeo to work together on autonomous delivery vehicles in the last mile scenarios.
According to Global Traveler, Ride hailing, which uses app-based ride services, didn’t exist 10 years ago, but is now valued at USD 61.3 billion worldwide. That number is expected to grow to USD 218 billion by 2025.